On Wednesday morning, Borders announced that it would be filing for bankruptcy. As one of the first steps in bankruptcy proceedings, the nation’s second largest bookstore chain will be closing 200 of its stores and firing 6,000 of its 19,500 employees in the next few weeks.

It’s also worth pointing out that Borders has stiffed publishers for hundreds of millions of dollars. A recent Publishers Weekly breakdown reveals that Penguin Group (USA) is owed $41.1 million, Hachette is owed $36.9 million, Simon & Schuster is owed $33.8 million, Random House is owed $33.5 million, and HarperCollins is owed $25.8 million.

With thousands of jobs disappearing, hundreds of millions of dollars lost in bankruptcy limbo, and vital physical space possibly being taken up by other hands or converted into new retail areas that will have little to do with books, it would be a severe mistake to suggest that this won’t have a sizable impact on the book industry. On the other hand, now that the inevitable has occurred, the time has come to examine whether losing a Borders near you means losing the physical bookstore experience.

Laura Kuechenmeister, who handles events and marketing for the Albuquerque indie Bookworks, suggested in a recent blog post that it has become necessary for independents to work together to promote book culture. If the Borders closings represent an opportunity for the indies, then the moment has arrived for indies to serve as optimal community bookstores.

Yet it has been put forth by a few shortsighted pundits that “the space won’t come back.” Certainly many of the regular customers will shift to online spending and e-books. Sarah Weinman has proposed that the Borders closing represents the end of the chain bookstore era, suggesting that “we’ll look back and realize massive superstore chain bookstores were the subprime loans and credit default swaps of the publishing industry.”

In the next few years, booksellers will need to transform their operations in which physical space and community matters and those vital connections with customers become more personal and long-term. And the vital question we have to ask now is what the present bookstore grid looks like. As you can see from the list below, in most cases, there is an independent bookstore within ten miles from a closed Borders.

We should not discount the reality that some Borders closings will have a serious impact on communities, especially in rural areas within Colorado, Florida, and Ohio. Yet my investigations have also revealed that there are a great number of independent bookstores, often in unexpected areas. These independent bookstores are run not by faceless corporations, but passionate book lovers who very often read the books they stock. Their stock is, in most cases, almost exclusively physical books.

In a USA Today article from last week, Fordham University marketing professor Albert Greco estimated that Borders has about 8.1% of the total book market. However, it’s worth pointing out that most of Borders’s 500 stores have opened up only in the last decade. How much of this 8.1% will move on to other physical bookstores? It is my hope that, in assembling this list, I have given that 8.1% share of the marketplace a very good reason to continue to support bookstores, especially those bookstores run by people who are interested in supporting the community.

Methodology: The list of 200 Borders bookstores was obtained from court records. I located the alternative bookstores using a variety of online sources (Indiebound, Yelp, Citysearch) and attempted to include independent bookstores that were favorably reviewed by customers. Mileage was calculated by ZIP Code. As of February 18, 2011, I have confirmed that all of the following bookstores all remain open for business. I have also eliminated the two Puerto Rico bookstores that are closing. Like the Hawaii situation, if a Borders store closes on an island, chances are that you’ll have to go for a swim to find an alternative. I encourage the readers to leave comments if there are independent bookstores that I have overloooked or if the information is inaccurate. I will happily amend the list to account for any late-stage crowdsourcing.

2/20/11 UPDATE: Thanks to all who have spread the link around and offered additional alternatives in both the comments and on Twitter. I have amended the list to reflect this input. Please be advised that the criteria involves bookstores that are close to a closing Borders. So if I have missed your favorite independent bookstore, it is probably because there were other bookstores that were closer to the closed Borders in question. Nevertheless, I have added all received suggestions. Please feel free to continue with the comments and I will offer another update.

7/19/11 UPDATE: As of Monday, July 18, 2011, Borders could not find a buyer. It will be closing all of its stores. In the next few weeks, I will be preparing a revised list incorporating these new stores, along with the data we have generated from this list. Thanks to all for your continued input.

Borders Bookstore #95
4030 Nawillwill, Lihue, HI 96766Alternatives:
Unknown aside from Kona Stories. Hawaii, being a group of islands, is particularly hard hit by the Borders closings. However, there are three Barnes & Nobles located in Hawaii — two in Honolulu, one in Maui.

Some commentators have considered recent financial setbacks within Borders to represent the beginning of the end for the forty year old bookstore chain. But another apocalyptic variable was presented on Thursday night when several Simon & Schuster author events were inexplicably listed as “canceled” on the Borders website without additional explanation. To add to the mystery, there was no indication on the Simon & Schuster website that the events had ever been scheduled at Borders in the first place.

On Thursday, The New York Times‘s Julie Bosman and Michael J. De La Merced reported that “several people said they were scrutinizing future print runs and examining the schedules of author events at Borders in February and March, with the expectation that they would be canceled.” Bosman and De La Merced did not name any specific sources, but an investigation has revealed that Simon & Schuster has taken steps to cancel events as early as next week.

The latest Simon & Schuster event that could be located on the Simon & Schuster website was a January 18th event in New York for author Chris Cleave. It’s possible that this event is still on because Mr. Cleave plans to arrive from England. The earliest canceled Borders event is January 12th (the Lo Bosworth event at Columbus Circle listed below), suggesting very strongly that a blanket scrubbing of
Simon & Schuster Borders events will kick in as of next week.

What follows is a comprehensive but by no means complete listing of store events that are presently listed as canceled (including two additional cancellations related to Penguin imprints). In the next few days, I’m hoping to get representatives of Borders and Simon & Schuster on the record to determine why this decision was made, and whether any alternative plans will be made to accommodate the authors.

1/27 — Patricia Briggs (Silver Borne and River Marked, Ace) — Ace is a Penguin imprint, not Simon & Schuster. But this Borders event is not listed on Ms. Briggs’s official website. But her website indicates that she’s still signed on to hit a few Borders stores during her River Marked tour.

3/3 — Mike Huckabee (A Simple Government, Sentinel) — Sentinel is a Penguin imprint. It’s also possible that there was a scheduling conflict with Huckabee’s schedule. (In light of the fact that Patricia Briggs — also a Penguin imprint — has been canceled, it is very possible that Penguin may have offered a few peremptory cancellations. Some inside sources are suggesting very strongly to me that Penguin has stopped shipping books to Borders, although I’m hoping to corroborate this with an official statement.)

* * *

Investigations into these developments are ongoing. I hope to have more information in the next few days.

1/7/11 EARLY AM UPDATE: I’ve contacted numerous authors about these developments, hoping to shed some additional light on the story. Kelly Simmons, author of The Bird House, informed me this morning that her S&S publicist did fill her in on the Borders developments, but that she had been following the story shortly after the Borders announcement.

“Showing up for an event at a bookstore that doesn’t have plenty of stock of my two novels — Standing Still and The Bird House — for me to sign — that would be a freaking nightmare,” said Simmons, who pointed out that chain bookstore appearances are more important for a top-selling author than a literary one.

Simmons also noted Borders’s recent reputation for not working well with authors. But does a Borders appearance even make that much of an impact? Simmons’s promotional efforts have been more devoted to book clubs, but she says that Barnes & Noble stores and independent bookstores “are very good about being involved in reading groups.”

Still, Simmons regrets the canceled appearance. She reports that “the Bryn Mawr/Rosemont Borders is run by smart, book-loving people, and I know hundreds of readers in the area who would have attended the book launch event, so it was a bummer.” However, Simmons had scheduled two events the following week at independent bookstores.

“It’s always sad when a brand that started out so inventive and interesting can’t survive,” concluded Simmons. “And for many readers, their local Borders is the only bookstore for many miles around. That is the greatest loss.”

1/7/11 UPDATE II: Jodi Picoult, author of the forthcoming Sing You Home, also confirmed with me that her publicist had filled her in on the Borders financial mess. Picoult, who says that she has no input into any of her bookstore appearances, doesn’t believe that the book tour is the only driving force for sales. Nevertheless, the book tour allows Picoult “to personally thank the people who are reading my books — so it is a very important part of my publishing cycle.”

Picoult she says that Borders “has been a good friend to me as my career has progressed and I’m very sorry to hear that they are in dire straits.” While there is nothing yet listed on its events calendar, Politics & Prose will now be sponsoring the scheduled event in DC on January 22nd. The independent bookstore will be using the same offsite venue as Borders.

If Borders slides into oblivion, will this translate into more events with prominent authors at independent bookstores?

“Obviously if Borders collapses,” said Picoult, “I’ll have the opportunity to do events with some other bookstores I might not have been able to visit before because of timing and availability. That said, I certainly hope Borders comes through this latest struggle, and that I can continue to work with them in the future.”

1/7/11 UPDATE III: In an effort to get a complete story, I’ve tried to get comments from Borders and Simon & Schuster, contacting them by telephone and email. As of 10:30 AM EST, nobody has returned my calls. Another anonymous source suggests that nobody is interested in talking on the record.

1/7/11 UPDATE V: I have heard back from Borders spokesperson Mary Davis: “Borders stores host thousands of free enriching events each year, and that will continue. From time to time, events get canceled. Our schedule of events remains full.” I have asked Ms. Davis if it is Borders’s position that nine canceled events reflects an occasional or “time to time” cancellation. If I hear anything back, I will report it here.

1/7/11 UPDATE VI: Jodi Picoult just informed me that her DC event may still get sponsored by Borders after all. A final decision is expected in the next few weeks. Since Jodi Picoult’s books tend to sell very well (to be clear, “#1 New York Times bestseller” well), it’s quite possible that Picoult’s event is being used as a bargaining chip with Borders. Or maybe this is an effort to save face. We have only speculation to go on — since Simon & Schuster doesn’t wish to elaborate on “No comment” and Borders insists that its “schedule of events remains full.” I have emailed Barbara Meade at Politics and Prose to see if she might provide some additional input on what has become a cloudy matter.

1/7/11 UPDATE VII: I’ve heard back from Barbara Meade: “We were never contacted by Simon and Schuster. We are partnered with the 6th and I Historic Synagogue downtown, where we do some of our larger events and they contacted me to ask if we had any problem with their doing an event for Jodi Picoult that Boarders had contacted them about. I told them I didn’t have any problem with it because we didn’t
have any plans to do any event is Jodi Picoult. Our events schedule is completely filled two months into the future with ten events a week. We don’t have time for last-minute events.”

Shortly after securing $42.5 million to repay its loans and taking on additional credit to stay alive in a particularly troubling economy, Borders Group Inc. announced that it will be issuing a payroll freeze, enrolling 90% of its employees into an innovative Slavery Program. The program is legal, thanks to a little-known clause contained within the Borders Employment Agreement that none of the workers thought to read.

A memo from the Ann Arbor, Michigan-based company, intercepted by The New York Times, revealed that the Slavery Program would begin in mid-April. Borders stores are now being remodeled to provide slave quarters in the back. Several ringlets will be placed in convenient locations to shackle up employees at various points within the store. Clerks will be lashed if they don’t restock shelves fast enough.

“We had to cut costs somewhere,” said interim CEO Michael Edwards, “and this seemed the best way to secure a profit. After all, didn’t Aristotle say that slavery was a natural part of civilization?”

Asked if the slaves would prove unsettling for regular customers, Edwards pointed out that the employees were never noticed anyway.

Edwards pointed to several tall piles of job applications to buttress his viewpoint, observing that several desperate people had offered to work for free after a long and unsuccessful job search.

“So you can see it’s a win-win situation,” said Edwards. “And if other corporations follow, we can keep up a very good slave trade.”

Borders managers have begun a grueling fast-track Slavemaster Training Program, presently taking place in Arizona. Here, they will learn how to issue corporal punishment whenever a Borders employee gets uppity. Thankfully, employee behavior has proven infinitely adaptable. The new slaves have already started bringing glasses of lemonade for the managers without being asked.

Edwards expects to face legal resistance to his plans — in large part because nobody has thought to challenge the 13th Amendment for quite some time.

“You say ‘slavery’ like it’s a bad thing,” said Edwards. “But we’re more civilized than we were in the 19th century. At least they now get healthcare.”

An anonymous source has alerted me to an email indicating that Borders will not be paying book distributor Independent Publishers Group for two months “due to anticipated excessive returns.” IPG has stated that its return rate has been historically low. But this default will cause IPG to lose approximately $2 million in revenue. IPG has issued an email to publishers, asking them if the publishers wish to continue distributing books through Borders or accept a new provision that IPG can only guarantee payment (for Borders) “only for the publishers’ historical printing cost of books that are not paid for, rather than for the whole amount of any unpaid invoices.” Whether this will present a partial repeat of last year’s AMS bankruptcy, with many IPG publishers left in the lurch because of Borders’s decision, remains to be seen.

UPDATE: IPG President Mark Suchomel has left a comment claiming that IPG is “having a record sales year.” I have also been asked by IPG to “retract” this post. I do not intend to do so. I have merely presented information that was also reported by Galleycat this morning, asking the perfectly reasonable question of whether the $2 million shortfall will harm IPG and the publishers. If Mr. Suchomel wishes to be transparent, offering specific figures and data about how IPG is in “great shape financially,” rather than having his publicist email me and deeming me “irresponsible,” then the forum here is open to him. I have also informed the publicist that I would be happy to talk with Suchomel over the phone, and I have sent an email to Suchomel asking for specific evidence to prove his claims. It is also worth noting that IPG has kept its mouth shut when talking to The Bookseller‘s Catherine Neilan.

UPDATE 2: To understand why Suchomel should probably respond with additional details about IPG’s financial security, here is the memo that was sent to publishers from IPG.

Special Alert: Borders Policy

The financial health of Borders does not appear to be improving. They now tell us that they will not be paying us for two months due to anticipated excessive returns. IPG’s returns rate is historically low, so this is a somewhat questionable course of action. They were in a weak condition even before the current financial crisis, and of course no one knows how long or how severe that crisis will prove to be. The immediate reason for our concern is that the companies that insure receivables, who make a living knowing the risks of granting credit, have now refused to cover Borders.

IPG typically carries receivables of approximately two million dollars with Borders. A default of that amount would by no means put IPG out of business, but it would be painful, weaken the short-term health of the company, and would mean we would have to defer some of our plans for future growth.

Distributors need to be especially vigilant about the viability of their customers because, in case of a default, a distributor is out the full value of any unpaid invoice; a publisher, on the other hand, is really only out the printing cost of the lost inventory.

To put some numbers on this concept: a $14.95 paperback should cost about $1.50 a copy to print. But IPG bills Borders $7.48 for that copy (a 50 percent discount). That is a difference of $5.98 or almost four times the printing cost.

Given these considerations, IPG must now ask its client publishers to choose one of two options in regard to future Borders orders for their books. Publishers must either:

Instruct IPG not to ship their titles to Borders

Accept the provision that IPG, for Borders business only, will guarantee payment only for the publishers’ historical printing cost of books that are not paid for, rather than for the whole amount of any unpaid invoices

IPG’s competitors in the book distribution business either have always had a provision in their standard agreement that allows them to deduct customers’ defaults from the amounts owed their client publishers; or else they have recently adopted the policy that they will not take any of the credit risk for Borders payments. IPG, at no small cost, has covered the amounts lost when accounts stop paying and our client publishers have received the full amount owed for their titles. Over the years this has been a significant though somewhat low-profile benefit of working with IPG.

We think that the best course for IPG’s client publishers is to accept the option of still shipping to Borders. Borders has been paying IPG, they are reported to have cash on hand and access to credit in the future, and the last thing anyone wants is to have only one giant chain in the retail book market. Borders may prosper, and even in the worst case, given IPG’s uniquely flexible policy, the value of your inventory would be preserved.

On the other hand, booksellers and wholesalers in trouble sometimes resort to tactics that can damage publishers. Sometimes they return books that are selling well and then reorder the same titles. This allows them to start the payment meter over again, but of course it means more damaged copies. Sometimes they order far more copies than they need for the purpose of having more stock in their warehouse to comfort their secured creditors. Sometimes they have no reasonable expectation that they can stay in business, but order books just in case some miracle arrives to save them. We will not allow your titles to become pawns in any such games.

We do not see evidence of this sort of behavior to date at Borders, but we have, for some weeks now, scrutinized every one of their purchase orders, in some cases reducing them to reasonable amounts. Their performance has been erratic. We will continue this vigilance in regard to the titles of publishers who wish IPG to continue to ship them.

Please inform IPG in writing or by e-mailing Vice President of Operations Mark Noble, of your choice by Monday, November 10. Until we are informed of your decision, we will assume that you do not want us to ship your books to Borders. This policy will stay in affect only while there are serious concerns about Borders viability, and we will keep you apprised of any new developments.

If you would like to discuss these issues further, please contact Curt Matthews, x210.

UPDATE 3: Mark Suchomel has responded to my queries via email. He hasn’t provided me with any specific information about IPG’s financials and has asked me to take IPG’s current fiscal health based on a statement of good faith, but his answer does provide some insight into the Borders situation.

Thanks for giving me a chance to clarify. Our record sales year is a fact. We have shipped more and billed more than we ever have. I’m not sure how I can give you tangible evidence and I would hope that you would consider a statement by the president of the company as a reliable source. We are a private company and don’t release financials like a public company is required to do, but since we have very little debt, which should be eliminated by the end of the year, and strong sales in several markets, and compared to what we read and hear about other businesses in the industry, we consider this to be great shape. Estimated book sales may be dropping, but as our sales are increasing we are obviously gaining market share.

We are not out $2 million dollars as you seem to imply. That is the amount Borders typically owes us. IF something happens to Borders and IF we were to keep shipping them at that level, we could possibly be out that much if something were to suddenly happen. You can bet that every major supplier to Borders is looking at their exposure and trying to reduce it, or at least they are making sure it is something they can work through if the account fails. We don’t think they’re going to close their doors in the next few weeks but we are certainly going to make sure they don’t owe us such a large amount until we see signs that they have turned things around.

Everyone who relies on retail sales is anticipating a tough holiday season. In the shape we are in now and with a careful eye on Borders and other struggling accounts we will be one of the companies in the industry to come out of it in reasonable shape. You implied a comparison to the AMS debacle
at the end of 2006 which endangered the business of many of their PGW clients. This is not a responsible comparison. There is no issue as to the health of our company. The issue is the health of Borders. Among other things publishers rely on us to keep them safe from potential disaster. In
this way they are in better command of their risk and can decide if one course of action is better than another. Your speculation that we could be in trouble has no basis in fact. We’re not even close to being in trouble but we are also going to make sure we don’t get there.

Did you know that another large distributor also made this change a couple of weeks ago but won’t even cover the printing and binding costs of their publishers if something were to happen? I’m not sure why that wasn’t covered. Distributors have a unique role and responsibility in the industry
in that we collect revenue on behalf of our clients. Our clients need to know that we’re being very responsible. Rather than cut off an account or at the least reduce the amount of credit we are willing to extend them, we feel it is a reasonable move to let our publishers decide if they want to shoulder some of that risk in order to keep the sales moving through at the current rate. Most of them are willing to and are very appreciative of the way we have handled this.